Palm Harbour Capital an investment management company, released its first quarter investor letter. A copy of the same can be downloaded here. The fund gained 4.6% gross of fees during the first quarter. The market’s primary focus in the first quarter was interest rates and inflation, as it has for the previous few years. Stronger than anticipated economic data during the first quarter elevated the hopes for rate cut expectations, this propelled the rally further. In addition, to know the best picks of the fund during 2024, please check its top 5 holdings.
Palm Harbour Capital highlighted stocks like International Game Technology PLC (NYSE:IGT), in the first quarter 2024 investor letter. International Game Technology PLC (NYSE:IGT) is an operator and provider of gaming technology products and services. The one-month return of International Game Technology PLC (NYSE:IGT) was 1.72%, and its shares lost 37.03% of their value over the last 52 weeks. On June 27, 2024, International Game Technology PLC (NYSE:IGT) stock closed at $20.08 per share with a market capitalization of $4.049 billion.
Palm Harbour Capital stated the following regarding International Game Technology PLC (NYSE:IGT) in its first quarter 2024 investor letter:
“We have been shareholders of International Game Technology PLC (NYSE:IGT) since December of 2019 and we first wrote about it in our first quarter 2020 letter, in the depths of the COVID panic when we were adding to the position. We initially invested under the thesis that the lottery business was a high quality, recession resistant, recurring business and that the market was punishing the stock due to high leverage. The leverage was due to the previous merger bringing GTECH and IGT together as well as to the nature of the business where typically a large upfront fee and/or capital expenditure is required to win a multi-year concession from a government. The company was paying too high a dividend to support the controlling family and we thought they would eventually adjust this to pay off the debt to prepare for future tenders. COVID then occurred and showed how even the recession resistant lottery business could be put on its knees for a short period of time.
The company wisely pivoted to debt reduction. They cut their dividend, divested their Italian B2C business Lottomatica for €1.1 billion in December 2020 and their Italian commercial payments business in February 2022 for €700 million. Due to these transactions and significant free cash flow generation the company went from peak net debt / EBITDA of 7.0x at year end 2020 to 2.9x at the end of 2023. This is the lowest in company history. Despite this, the shares have languished and continue to trade around 6x EV/EBITDA, which was roughly similar to where it traded in 2019, despite the massive step change in leverage….” (Click here to read the full text)
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International Game Technology PLC (NYSE:IGT) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held International Game Technology PLC (NYSE:IGT) at the end of the first quarter which was 33 in the previous quarter. The first quarter revenue of International Game Technology PLC (NYSE:IGT) exceeded expectations, rising by nearly $1.1 billion, driven primarily by Global Gaming and iGaming performance. While we acknowledge the potential of International Game Technology PLC (NYSE:IGT) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
We discussed International Game Technology PLC (NYSE:IGT) in another article and shared the list of 50 Companies in London. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
